30 billion-dollar valuation collides with doubts: why did Firmus cancel its public offering?

Hours before the launch of what was expected to become one of the largest listings in Australian stock market history, the AI data-center company Firmus, backed by Nvidia, closed its prospectus, announcing a sudden withdrawal from going public, a move that again highlighted the wide pricing gap between developers’ enthusiasm and asset managers’ calculations.

The company, which was targeting a valuation of over $30 billion (about £22.65 billion), justified its move by citing recent market volatility and prevailing conditions, stating that a public listing no longer serves the interests of the company or its shareholders, and that it will instead seek liquidity through private markets and alternative financing options.

The real story lies in the hesitation of large funds.UniSuper, one of Australia's largest pension funds, disclosed its refusal to take part in the offering, with the fund’s chief investment officer John Pears saying the company already has a compelling story but lacks a convincing valuation, expressing concern that the firm may have to increase borrowing to fund its growth plans if the offering is not priced correctly.

Firmus builds and operates liquid-cooled data centers that it calls “AI factories,” serving heavyweight customers such as OpenAI and Meta, with operations spanning Australia, Singapore and the Asia-Pacific region, and counting investors including Nvidia, the private-equity firm Blackstone and the trading firm Jane Street.

Nonetheless, this technological and financial heft has not quelled the growing questions on Wall Street and global markets about the fate of hundreds of billions of dollars poured into computing infrastructure without a clear long-term return trajectory. Firmus’s decision coincided with selling pressure on Nvidia and Oracle shares in U.S. trading after reports showed OpenAI’s revenue falling short of prior estimates, at a time when Sam Altman had ruled out a public listing for the creator of ChatGPT this year due to safety concerns, despite earlier hopes for valuations approaching a trillion dollars for its rival Anthropic as well.

The field is the judge.For the business sector and tech-infrastructure officials in the Gulf and Egypt, Firmus’s retreat carries a direct implication that goes beyond Sydney and Singapore. While regional players race to reserve server space and sign memoranda of understanding for liquid-cooled data centres to run massive models, the Australian firm’s pull-back shows that financing this infrastructure through capital markets is no longer a clean cheque, and that pension funds and investors are now drawing a strict line between the operational value of data centres and the inflated valuations that assume limitless growth.

In practice, this shift means that the cost of financing computing may increasingly rely on heavy debt and private funding instead of fast public offerings, forcing decision-makers in regional institutions to scrutinise the sustainability of cloud partners and the pricing plans for dedicated capacity in the coming years before committing to long-term contracts with operators that may face pressure to restructure their debts.